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Iceland’s plan for bridging the pay gap

Iceland’s government and the social partners have reached a new gender pay gap deal. In the next two years they aim to reduce the gap and to agree on a project plan with joint solutions and measures. Their goal is equal pay for equal work. The public sector should set an example for other employers.

Nov 15, 2012 | Text: Guðrún Helga Sigurðardóttir

Minister for Welfare Guðbjartur Hannesson has signed a three-partite agreement between Iceland’s government, employers and trade unions outlining measures to fight pay gaps in the labour market. The parties will agree on a time-limited project plan. They will negotiate various common measures and cooperate on research, advice and the spread of information over the next two years.

Gender equality is a top priority for Iceland’s government. Early this year Prime Minister Jóhanna Sigurðardóttir told Nordic Labour Journal how important it is to her to fight the gender pay gap. She said her government was preparing a project plan aimed at achieving equal pay. 

That project plan has now become reality.

Power to influence developments

The public sector will take the lead. Management within certain public institutions has some power to influence local wage agreements. Yet so far not enough has been done to address the gender pay gap - quite the opposite.  

The project plan includes the formation of a new consultation and cooperation committee with representatives from the government, employers and trade unions. All information on pay gaps and gender equality issues in Iceland will be gathered in a new, central database. There will also be more research into the effect parental leave has on the balance between work and home life, to which extent parents make use of their right to stay at home with their children etc.

The government has also decided to improve the gathering of wage information. The state plans to publish an analysis of public sector wage development in order to identify any gender pay gaps. This will be done on a regular basis to prevent any pay gaps emerging. 

The committee will also study how labour market wage agreements are structured and it will help look at work distribution in Iceland’s municipalities to see whether women are paid less than men.

World’s first wage standard

Pay gaps vary between seven and 17 percent in Iceland depending on which survey you look at. There have been many surveys, but different methods have given different results. Minister for Welfare Guðbjartur Hannesson says the surveys do identify a gender pay gap.

“While pay gaps narrowed after the banking crisis, I’m afraid they are widening again,” says Guðbjartur Hannesson.

The launch of the project plan will also see the world’s first certified wage standard being put into practice in Iceland. It is being tested right now but is soon ready for implementation. Both private and public companies can use the standard. They will be given a certificate if they can prove that they are following the standard and are paying equal wages for equal work. The hope is to achieve total wage equality.

Not recognising the problems

Kristín Ástgeirsdóttir is the Managing Director at Iceland’s Centre for Gender Equality. She is happy with the launch of the government’s project plan. She is positive about the agreement to develop a single overview of pay gaps. 

She also supports providing companies with information and encouragement. 

“I think we have been trying to skirt this issue both in Iceland and in other countries. We should have been doing something earlier,” says Kristín Ástgeirsdóttir.

Marianna Traustadóttir is a gender equality consultant at the Icelandic Confederation of Labour (ASI). She is happy that he committee has enough money to employ a person whose sole job it is to fight the pay gaps.

Low pay in healthcare

The Managing Director at Iceland’s Association of Academics (BHM), Stefán Aðalsteinsson, says pay gaps are evident in different sectors. People working in finance or in the building industry are better paid than healthcare workers.

He reckons it is possible to balance wages between sectors and different authorities. Stefán Aðalsteinsson thinks pay gaps are most visible when you look at who gets management jobs in the state and private sectors - they are more likely to be men. 

“There is a form of pay gap between the sexes,” says Aðalsteinsson and points out that evening out wages for all employees within one sector could be costly.

“It is easier to bridge the pay gaps when you are only talking about a few individuals,” he says.

Slow the development

Minister for Welfare Guðbjartur Hannesson thinks the project plan realistically can slow the development, but of course he is hoping for an even better result: to turn the trend. But it will take two years before he knows if that can happen.

“That’s when the partners will assess the result and decide whether the project continues,” the Minister says. 

Their decision, of course, depends on whether the pay gaps are still present in the labour market at that time.